Government Contractor Sentenced to Probation and Ordered to Repay More Than $83,000

            CONCORD – Enco Industries, Inc., a company located in Plaistow, New Hampshire, was sentenced to three years of probation and ordered to pay $83,717.85 in restitution for making false statements to the U.S. Department of Defense’s Defense Logistics Agency, announced United States Attorney Scott W. Murray.

            According to court documents and statements made during a hearing earlier today, the Defense Logistics Agency (“DLA”) purchases operating supplies (“items”) for the U.S. military from government contractors through the federal supply system.  The Department of Defense (“DoD”) requires that all items conform to strict military specifications identified in its contracts.  Contract solicitations include the DoD’s specifications for the requested item.

            An oil sorbent mat is one item the DLA acquires through the federal supply system.   Because the mats are used to absorb flammable liquids, the mats are required to meet specifications requiring them to dissipate electrical charges to the ground.

            According to court documents, in December of 2011, the DLA posted a solicitation to acquire approximately 96,000 units of hazardous material mats over a five-year period.  The solicitation required, among other things, that the mats pass standards established in National Fire Protection Association for Static Decay and Surface Resistivity.  The solicitation also required the selected government contractor to purchase mats manufactured by a company in Tipton, Pennsylvania or another company in Pennsylvania.

            Enco has been an approved government contractor since 2004.  On January 13, 2012, Enco’s government contracting manager submitted Enco’s bid for the contract.  The bid stated that Enco would purchase the mats from the company in Tipton for $29.15 for each unit containing 100 mats during the first year of the five-year annually renewable contract.  This statement was false because, at the time the bid was submitted, Enco did not intend to purchase the mats from the company in Tipton.

            The court documents further allege that on June 18, 2012, the DLA awarded the contract to Enco and sent the company a purchase order that incorporated all the required specifications for the mats.  From June of 2012 to October of 2013, Enco provided approximately 21,700 units to the DLA.  To obtain payments, Enco’s office manager submitted claims to the DoD.  Most of claims were false because only seven units contained mats that were manufactured by the company in Tipton.

            In August of 2013, an independent company concluded that several of the mats it tested did not meet the contract’s requirements for static decay or surface resistivity.  As a result, the DLA sent Enco a letter on October 7, 2013, that notified the company that the contract might be terminated due to non-conformance.

            In an October 2013-email addressed to the DLA, Enco’s president stated that Enco bought the mats from a non-approved manufacturer because the amount charged by the company in Tipton was prohibitive.  In the same email, Enco’s president stated that Enco was not able to identify the non-approved manufacturer.  This statement was false because, at the time of the email, Enco was able to identify the manufacturers from whom it had purchased the mats.

             While speaking with Special Agents from the Naval Criminal Investigative Service (“NCIS”) and Defense Criminal Investigative Service (“DCIS”) on February 21, 2014, Enco’s president stated that before Enco submitted its bid on the contract, the company received price quotes from the two approved manufacturers.  According to the court documents, Enco’s president also stated that Enco decided to buy the mats from the company in Tipton because its price was lower.  This statement was false and misleading because when Enco submitted its bid for the contract, it intended to fulfill the contract by purchasing mats from a non-approved manufacturer.

            Enco previously pleaded guilty to make a false statements to an agency of the United States government on June 3, 2019.

            “Those who do business with the federal government must do so honestly,” said U.S. Attorney Murray.  “When companies mislead the government in the efforts to obtain government contracts, they are committing a serious federal crime.  We will not hesitate to work with our law enforcement partners to root out white collar crimes in order to protect the integrity of the government contracting process.”

            "Today's sentencing is the end result of a successful joint effort to protect the U.S. Department of Defense's (DoD) procurement process," stated Leigh-Alistair Barzey, Special Agent in Charge of the Defense Criminal Investigative Service (DCIS) Northeast Field Office.  "DCIS is committed to working with the U.S. Attorney's Office, District of New Hampshire, NCIS and AFOSI, to investigate and prosecute companies that provide false statements to the DoD in a fraudulent effort to obtain defense contracts.”

            “Fraud is never a victimless crime,” said Special Agent in Charge Leo S. Lamont of the NCIS. “This case of using inferior and substandard materials damaged the readiness and safety of U.S. forces. The victims are not just our men and women in uniform, but all American taxpayers. NCIS will continue to tirelessly pursue all those who seek to take advantage of the Department of the Navy and its interests while keeping the procurement system fair and honest."

            "The Air Force Office of Special Investigations (AFOSI), along with its law enforcement partners, has, and always will, aggressively identify, investigate and neutralize anyone who attempts to defraud the US Government and put our nation's warfighters at risk," stated Special Agent-in-Charge Jason T. Hein, AFOSI, Office of Procurement Fraud.”

            The case was investigated by the NCIS, DCIS, and the U.S. Air Force Office of Special Investigations, Office of Procurement.  Assistant U.S. Attorney Robert Kinsella prosecuted the case with assistance from K. Drew Ayers, Acquisition Fraud Counsel for the U.S. Air Force Materiel Command Law Office.

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